[Federal Register Volume 68, Number 53 (Wednesday, March 19, 2003)]
[Notices]
[Pages 13354-13356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6553]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47484; File No. SR-ISE-2003-11]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the International Securities Exchange, Inc., Relating to a 
One-Year Pilot for Options Intermarket Linkage Fees

March 11, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 6, 2003, the International Securities Exchange, Inc. (``ISE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the ISE. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its fee structure to clarify 
which fees apply to trades pertaining to the options intermarket 
linkage (``Linkage'') and to specify that such fees are for a one-year 
pilot. The text of the proposed rule change is below; proposed new 
language is in italics.
* * * * *

                                                                    Schedule of Fees
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                                          Amount           Billable unit                    Frequency                             Notes
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        Electronic Market Place
Execution Fees
    [sbull] Customer...................     $0.05  contract/side................  Transaction..................  Fee waived through June 30, 2003.

[[Page 13355]]

 
    [sbull] Facilitation...............      0.15  contract/side................  Transaction..................
    [sbull] Market Maker & Firm
     Proprietary (for a pilot period
     expiring on January 30, 2004,
     including members of other
     exchanges executing Linkage
     transactions, except for
     Satisfaction Orders)
        A.D.V. Less Than 300,000.......      0.21  contract/side................  Transaction..................  Based on Exchange A.D.V.
        A.D.V. From 300,001 to 500,000.      0.17  contract/side................  Transaction..................  Based on Exchange A.D.V.
        A.D.V. From 500,001 to 700,000.      0.14  contract/side................  Transaction..................  Based on Exchange A.D.V.
        A.D.V. Over 700,000............      0.12  contract/side................  Transaction..................  Based on Exchange A.D.V.
    [sbull] Surcharge for Options on         0.10  contract/side................  Transaction..................  Excludes Public Customer Orders; Firm
     Nasdaq 100 Index Tracing Stocksm,                                                                            Proprietary fees for trades in the
     the Nasdaq Biotechnology                                                                                     iShares S&P 100 Index Fund waived
     Index[reg], the iSharesS&P 100                                                                               through May 31, 2003. Applies to P
     Index Fund, options on Select                                                                                Orders and P/A Orders in these options
     Sector SPDR[reg] Funds*, and                                                                                 for a pilot period expiring on January
     exchange traded funds based on                                                                               30, 2004. *Financial Select Sector
     indexes developed by the Frank                                                                               SPDR Fund XLF), Technology Select
     Russell Company**.                                                                                           Sector SPDR Fund (XLK), Utilities
                                                                                                                  Select Sector SPDR Fund (XLU).
                                                                                                                  **Russell 2000 Value iShares (IWN),
                                                                                                                  Russell 2000 Growth iShares (IWO),
                                                                                                                  Russell 1000 Growth iShares (IWF),
                                                                                                                  Russell 1000 Value iShares (IWD).
 
                                                                      * * * * * * *
Comparison Fee.........................       .03  contract/side................  Transaction..................  Fee waived for Customer Trades through
                                                                                                                  June 30, 2003. Applies to P Orders and
                                                                                                                  P/A Orders for a pilot period expiring
                                                                                                                  on January 30, 2004.
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* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In File No. SR-ISE-2002-19, the Exchange adopted rules governing 
operation of the Linkage.\3\ That filing also specified that certain 
existing Exchange fees would apply to Linkage trades. The purpose of 
this filing is to clarify that three ISE fees apply to Linkage trades: 
trade execution fees; a $.10 surcharge for options traded pursuant to 
licensing agreements (but only for executions in options specifically 
subject to the surcharge); and the $.03 comparison fee. Furthermore, at 
the request of the Commission staff, this filing would establish each 
of these Linkage-related fees as a one-year pilot, expiring on January 
30, 2004. The Exchange intends to file an additional rule change prior 
to the expiration of this pilot period either to extend the term of the 
pilot or to establish these fees on a permanent basis.
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    \3\ See Securities Exchange Act Release No. 47293 (January 31, 
2003), 68 FR 6232 (February 6, 2003).
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2. Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under section 6(b)(4) of the 
Act \4\ that an exchange have an equitable allocation of reasonable 
dues, fees and other charges among its members and other persons using 
its facilities.
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    \4\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change does not impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (a) By order approve such proposed rule change; or
    (b) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act.

[[Page 13356]]

Persons making written submissions should file six copies thereof with 
the Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC 20549-0609. Copies of the submission, all 
subsequent amendments, all written statements with respect to the 
proposed rule change that are filed with the Commission, and all 
written communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for inspection and copying in the Commission's Public 
Reference Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the ISE. All 
submissions should refer to SR-ISE-2003-11 and should be submitted by 
April 9, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-6553 Filed 3-18-03; 8:45 am]
BILLING CODE 8010-01-P